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Economic experts warn against net neutrality rule in Verizon-funded study

Economists, law professors and industry consultants told the Federal Communications Commission on Monday they don’t like the idea of a new net neutrality rule. In comments filed with the agency, 21 economic professors from universities such as George Mason University, Carnegie Mellon University and the University of Pennsylvania said that new rules would curb investment, dampen the prospects for innovative new technologies and reduce competition.

The lead writer of the comments, George Mason law professor Jeffrey Eisenach, was paid by Verizon Communications to write the report (in the first footnote). He said the company didn’t dictate the content of the report but funded the study; Verizon didn’t immediately respond to a request to comment about it.

Eisenach said none of the other co-signatories – such as Dave Farber of Carnegie Mellon, Gerald Faulhaber of the Wharton School at Penn, and Robert Hahn of Oxford University – were compensated as co-signatories.

“If you read the document, it’s a very detailed and substantive analysis of the major issues in the proceeding,” Eisenach said. “Verizon was completely hands-off from the get-go.”

In its analysis, the group came to the conclusion that:
(1) there is no evidence of significant market failures or harmful conduct;
(2) the proposed rules would outlaw practices that generally benefit consumers and competition;
(3) harmful conduct can be addressed under existing laws and regulations.

The FCC extended to April 26 its deadline for the public to weigh in on the controversial net neutrality proceeding at the agency. A new rule was cast into doubt after a federal court decision that the FCC didn’t have the authority to rule against Comcast on a violation of open Internet guidelines in 2005.

By Cecilia Kang  |  April 12, 2010; 3:00 PM ET
 
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Next: Another letter against net neutrality: organized by telecom PR group

Comments

Cecilia Kang is quick to point out when a study is funded by Verizon, but fails to point out that the sources she quotes in most of her articles regarding "network neutrality" regulations are funded by Google. Hmmmm.

Posted by: LBrettGlass | April 12, 2010 3:41 PM | Report abuse

Brett, who exactly is funded by Google, and do you have any evidence of that, other than your conspiracy theories?

Really Brett, don't you have a job to get to? A job that allows you to earn a fat living off of reselling special access lines thanks to the government regulating the rates you have to pay, and thanks to the free government spectrum you have.

Brett's psychosis aside, this is old news. The "study" came out last week, and if you read it, it consists of nothing more than classic first-order economist thought, with zero empirical data to support it. They assume the world is already one of perfect competition in the real microeconomic sense, and then postulate the consequences of anything that deviates from that a priori assumed perfection. They completely ignore concerns about vertical foreclosure and network externalities.

I hope Verizon didn't pay too much for it, because frankly Eisenach phoned it in on this one.

Posted by: AmyBandini | April 12, 2010 3:48 PM | Report abuse

The wonky language and persistent falsehoods in the comment just above betray the fact that this wasn't written by some "retired grandmother," but rather by a Google lobbyist. Perhaps Ms. Kang, perhaps one of Google's other lobbyists. I rest my case.

Posted by: LBrettGlass | April 12, 2010 11:55 PM | Report abuse

"Network neutrality (also net neutrality, Internet neutrality) is a principle proposed for user access networks participating in the Internet that advocates no restrictions on content, sites, or platforms, on the kinds of equipment that may be attached, and on the modes of communication allowed, as well as communication that is not unreasonably degraded by other traffic.
The principle states that if a given user pays for a certain level of Internet access, and another user pays for the same level of access, that the two users should be able to connect to each other at the subscribed level of access." -From Wikipedia, the free encyclopedia

In essence, the argument against net neutrality is that ISPs shouldn't be required to provide the degree of access they have charged you for. This FACT ought to be right out in front of EVERY debate on the subject; it is the basis of all clear thinking one can have on the subject.

Posted by: GhostOfEdsgerDijkstra | April 13, 2010 12:55 AM | Report abuse

All the so-called "net neutrality" laws will cause is the acceleration of people having to pay by the GB for internet access. Those who use the most (for torrrents of music and movies, and those watching streaming videos) will end up having to pay more than those who send a few emails a day. Now, of course, the quality of service must be what has been agreed upon, such as level of speed. But in the end, we will be going to a fee/GB downloaded model. The question is whether this will benefit consumers or stifle innovation?

Posted by: moonwatcher2001 | April 13, 2010 9:29 AM | Report abuse

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